Gold investment risks and options in India: Being the second-largest consumer of gold, investing in gold and gold jewellery has always been a favourite option in India, especially among women. Although physical gold can be bought in different forms, such as bars, coins, and even jewellery, this comes at a cost and brings in the risk of storage, risk of being stolen, as well as concerns around purity. So, is there a way to get rid of these risks while investing in Gold? Harsh Jain, Co-founder and COO, Groww, says there are several options in which women can invest in Gold sans risk.
“Thankfully there are other options to invest in gold beyond physical gold that women can look for,” Jain told FE Online. The Groww cofounder shared the following options that can be explored for avoiding the risk of investment in physical gold:
Jain said that just like stocks, gold ETFs are held in dematerialized form. Gold ETFs come with lesser holding cost and can be easily sold on the exchange. You can consider investing in Gold ETFs up to 10 per cent of your portfolio as a hedge against market uncertainties with a long-term aim. Gold ETFs are considered as non-equity investments and are taxed accordingly.
Sovereign Gold Bonds
Sovereign Gold Bonds are the safest way to buy digital Gold as they are issued by the Reserve Bank of India on behalf of the Government of India with an assured interest of 2.50 per cent per annum, said Jain.
The bonds are denominated in units of grams of gold with a basic unit of 1 gram. The maximum investment one can make is of 4 kg. These bonds have a tenor of eight years with an exit option from the fifth year onwards.
Gold Deposit Schemes
Gold Deposit Scheme is like a fixed deposit in gold. It seeks to mobilize idle gold by putting it to use, at the same time, allowing investors to earn interest upon the unused gold, as well as reap benefits when its value appreciates, said Jain.